Modules 16 - 18

Shows how a household's consumer spending varies with the household's current disposable income.

• Spending multiplier

• Planned investment spending

• Consumption function

• Inventory investment

The investment spending that businesses intend to undertake during a given period.

• Consumption function

• Planned investment spending

• Inventory investment

• Consumer spending

the value of the change in total inventories held in the economy during a given period. Inventory investment is unplanned when a difference between actual sales and expected sales leads to the change in inventories

• Inventory investment

• Planned investment spending

• Investment consumption

• Inflation rate

An initial rise or fall in aggregate spending that is the cause, not the result, of a series of income and spending changes.

• Spending multiplier

• Marginal propensity to consume (MPC)

• Autonomous change in aggregate spending

• Resource market

The ratio of the total change in real GDP caused by an autonomous change in aggregate spending to the size of that autonomous change; indicates the total rise in real GDP that results from each $1 of an initial rise in spending.

• Inventory investment

• Marginal propensity to consume (MPC)

• Spending multiplier

• Planned investment spending

The increase in consumer spending when disposable income rises by $1.

• Spending multiplier

• Marginal propensity to consume (MPC)

• Marginal propensity to save (MPS)

• Saving multiplier

The increase in household savings when disposable income rises by $1.

• Marginal Savings

• Marginal propensity to consume (MPC)

• Spending multiplier

• marginal propensity to save (MPS)

Shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households , businesses, the government, and the rest of the world.

• Aggregate supply curve

• Interest rate effect

• Aggregate demand curve

• Real wealth affect

(of a change in the aggregate price level) the change in consumer spending caused by the altered purchasing power of consumers' assets.

• Interest rate affect

• Real wealth affect

• Exchange rate effect

• Fiscal policy

(of a change in the aggregate price level) the change in investment and consumer spending caused by altered interest rates that result from changes in the demand for money.

• Exchange rate affect

• Interest rate affect

• Real wealth affect

• Fiscal policy